Dirt Cheap

Depending on your investment playground, it’s likely you’ve seen lots of competition for #investment properties# . There’s debate about why – is it still #hedge funds# snapping up buy-to-rent properties; is it renewed availability of capital for investing or is it simply a new awakening to the... More potential of real estate investing despite the market’s ups and downs?

In any case and in any market condition, there are things you can do to get discounted properties under contract – whether you are wholesaling, flipping or boosting your buy and hold portfolio.

First and foremost in ANY market, you must know that market and analyze your deal accordingly. It’s worth repeating because it’s true, “you make your money when you buy the property.” Buy it right and gains will follow.

So what does it take to buy it right? You must, let us repeat, MUST know how to #analyze a property for its viability for wholesale, retail or long term hold. The formulas vary, and knowing them and USING them is key. This is not a subjective endeavor – and it never makes sense to let exuberance override analysis. You simply cannot get caught up in the excitement of “A DEAL!!”

When you considering a #wholesale deal, you simply use the formulas that house flippers use based on #ARV (after repaired value) less your expenses and desired profit. This oversimplified description of the formula nets you the MAO (max allowable offer). Once you’ve calculated the MAO and included your wholesale fee, you’ve got your offer calculated for a wholesale deal.

Making offers on properties to hold in your portfolio is a completely different animal based on Net Operating Income (NOI). Rent less expenses equals your NOI. #NOI can then determine how to best leverage the property to maximum financial performance while minimizing risk.

Knowing your numbers matters when trying to buy discounted properties - once you know and master the formulas and the numbers, you can act quickly. And whether you are buying listed properties or off-market properties, timing is of the essence because you can bet that Joe Competitor is eyeing the same properties as you.

The pace of business in real estate is light years ahead of where it was even just five years ago. And remember what we just said about being able to ACT FAST? Websites and #apps devoted to real estate and specifically investment real estate have exploded in the marketplace. Big and small players are getting into the tech game because of demand. If you’re not leveraging technology in your business, take the time to explore. You absolutely must be able to: 1) Find deals and 2) Utilize good information for analyzing deals.

Some might say that the MLS is the ultimate source for low hanging fruit. But when you’ve got scads of investors and Joe Owner Occupant bidding on the same property does it really qualify? We say create your own low hanging fruit!

Seller #motivation is always key in finding the very best deals in real estate. Sellers will sell a house #dirt cheap# for a lot of different reasons – reasons that go way beyond just #foreclosure When you can help that seller solve the problems that the property causes them, you’re in a win-win situation.

• Inherited House – heirs live out of the area or simply don’t want to deal with the property
• Relocation – job, divorce, downsizing or owner going to assisted living
• Stigma – death at the house, or other factors that spook many buyers
• Declining Area – the family friendly neighborhood has gone downhill
• Owner going to Prison (it happens more than you think!)
• Landlords – burned out, accidental or liquidating for cash or even more passive income

Zig Ziglar is quoted as saying, “People don’t buy for logical reasons. They buy for emotional reasons.” #quote We would argue that the converse is true too – people don’t sell for logical reasons, they do it for emotional reasons. In an upcoming article, we’ll break this topic down for you further, so you know what situations to look for and how to offer solutions that get you under contract.

When you are looking for the best deals in real estate, think like a picker. You’ve seen the people on TV – they’re getting deals because they know their numbers (and have encyclopedic knowledge of values and their end buyers). They leverage technology to locate and assess their finds. They are digging for deals and finding them in the most unusual places - and in the end they are solving someone’s problem. All for a handy profit.

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